All eyes are on Tequila. The Margarita is officially the most popular on-premise cocktail year-round at Union bars and restaurants, and its cocktail cousin the Paloma ranked in the Top 10 last year.
With brands jockeying for share, and venues working to optimize their product offerings to increase sales, operators should continue to fine-tune their Tequila programs to capitalize on this seemingly boundless growth. We took a look at actual guest purchases in the 12-month period ending March 31, 2023 to bring you insights on how to best leverage this winning spirit through your cocktail offerings.
The Tequila Cocktails You Need to Know
What are on-premise customers ordering when it comes to Tequila? There are Margaritas, of course, the queen of all cocktails, in all its shapes and forms. At Union venues, 9 percent of Margaritas are ordered without salt, 28 percent are ordered frozen (more frequently by males), and 10 percent are ordered lower-calorie “Skinny” (more frequently by females.)
Margarita sales are at their highest in May and stay strong all summer, pointing to Cinco de Mayo as the official kick off of Margarita season. However, Margarita’s sky-high sales persist throughout the calendar year, so it seems that every month is Margarita season for this ever-popular cocktail.
All other Tequila cocktails trail the Margarita by nearly 20 percentage points. In the distant No. 2 slot, there’s the Mexican Candy shot, a concoction made of Tequila, watermelon schnapps, and hot sauce. Its high ranking is driven in part by its incredible popularity across Texas. Meanwhile, grapefruit-flavored Palomas are popular nationwide, and a steady winner throughout all seasons. Also in the top five, we have a Frozen Chambord, a fanciful frozen Margarita variation flavored with a raspberry liqueur.
And now, there’s Ranch Water. This newcomer to the Tequila cocktail scene debuted in Texas only two years ago and now takes the No. 4 spot in Tequila cocktails. Ordered nearly equally by men and women at Union venues, the light and refreshing highball consists of Tequila, lime juice, and sparkling mineral water — often Topo Chico from Mexico.
Note: Ready-to-drink (RTD) Tequila beverages like Cutwater Spirits and On the Rocks are tracked as spirits-based RTDs by Union and are not represented in this report. But their growth has both capitalized on and perpetuated the popularity of Tequila.
Ranch Water’s meteoric rise in just two years is extraordinary. So far in 2023, Ranch Water is proving to hold steady but isn’t showing continued high growth, though that could change as the year progresses, particularly heading into warm weather months in most parts of the country.
A Tequila Drink for Every Daypart
Looking at dayparts, shots primarily take the reign from dinner on into the night. The chart below highlights the popularity of Mexican Candy shots in the wee hours, though straight Tequila shots are not represented. Overall Tequila sales were highly over-indexed after 10 pm at Union venues, yet Margarita sales declined in the later hours. So all signs point to Tequila shots (with lime and salt) dominating late-night Tequila consumption.
Paloma sales are highest in Happy Hour period (4 pm to 7 pm) but remain steady into the Dinner hours (7 pm to 10 pm) and even into Late Night hours (after 10 pm). In comparison, Ranch Water is steady and rocking from Happy Hour to Late Night, and the Mexican Mule is a dinnertime star. Ranch Waters and Palomas are the only cocktails that have steady consumption through the evening, whereas Margaritas decline in the later hours in favor of shots.
Sales Opportunities: Optimize Your Tequila Cocktail Menu
“The takeaway from this report is that there is so much room for growth and innovation in the Tequila category, beyond Margaritas and Palomas, especially at high volume venues,” said Layne Cox, Chief Marketing Officer at Union. “What’s the next Ranch Water? Bars and restaurants of all sizes should be experimenting to capture the attention of customers who are eager to discover new Tequila drinks.”
Tequila’s spell won’t break anytime soon, so operators and brands should leverage Tequila offerings to their fullest sales potential with bold marketing tactics that reach past the tried-and-true successes of this spirits category.
Recommendations for Venues
- Introduce a Signature Ranch Water or Skinny Marg – If you’re not already serving these trending, lighter-style cocktails, it’s time to start — just add your own twist.
- Lean Into the Mexican Mule – The ginger beer-Tequila cocktail has potential to be more popular at dinnertime.
- Be Ready to Pour Shots – From Mexican Candy to Tequila Sunrise shots to straight up Tequila, leverage Tequila’s popularity in the late-night hours.
Recommendations for Brands
- Think Beyond the Margarita – What’s the next big Tequila drink? Bring new Tequila cocktail recipes to venue operators. Be innovative and brand-specific.
- Suggest Fresh Takes on Classic Cocktails – Recommend an Oaxacan Old Fashioned, Mexican Martini, or Mezcal Negroni, for example.
- Align Your Brand With a Popular Cocktail – Choose a popular cocktail like the Mexican Martini and market your brand as the preferred spirit for that drink.